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Website and investment product features
What is Lendermarket? How does it work?
Lendermarket is a P2P investment site that was established in 2019 to fund the loans of international lending group Creditstar (corporate website here). Lendermarket is formally registered in Ireland (most likely for tax efficiency reasons) however we understand that business operations are primarily in Estonia. Previously, Creditstar had used Mintos as a funding source. Creditstar loans can still be found at Mintos, but we expect availability there to end fairly soon. The interest rates offered for Creditstar loans at Mintos are now signficantly lower than can be found at Lendermarket.
Lendermarket is very simple to use. It has functionality that allows investors to either select individual loans on the primary market, or use an auto-invest tool. At the moment there is no secondary market. However, we don’t think that is an issue because most loans are only 1-3 months in maturity currently.
The auto-invest function has all the usual options found on other sites. This includes country, loan term, interest rate, and loan originator. Lendermarket provides investors a weekly email that provides simple information about interest earned, principal received from investors, investments made, and cash held on their behalf. The site has good reporting functionality, allowing investors to see all activity on their account within a chosen time period, and it can generate statements.
Interest rates are currently between 12%-16% (although they tend to fluctuate). Most loans are short-term personal loans. All loans have buyback guarantees, including a group guarantee (i.e loans are guaranteed by both the issuer and the group). Loans are available from Czech Republic, Finland, Poland, Spain, and Estonia, Sweden and Denmark. Most loans appear to be coming from Creditstar Spain and Poland currently.
One thing to note is that Lendermarket does not want investors to send funds to them via services such as Transferwise, as it creates difficulties for them in performing the necessary AML checks. However this will not be a big problem for most European investors who will send funds via SEPA, but it may inconvenience some people.
All loans offered on Lendermarket currently come from a single lending group – Creditstar. The Lendermarket site was established by Credistar as a way for them to raise funding to help them grow their loan portfolio, and to reduce their reliance on Mintos.
As all loans have a buyback guarantee, we think the main investment risk is whether Creditstar goes out of business. How likely is that? We’ve been monitoring Creditstar performance for several years and in our view, they have one of the best operating records of any loan originator that P2P investors can currently purchase loans from. In our Mintos lender ratings, their current score is 79/100, which is one of the highest.
Why does Creditstar have such a high score? Firstly their track record. The business has been consistently profitable since 2012. Lendermarket made a profit after tax of €2.1m in the first 6 months of 2019. One of the key metrics for lending businesses is their ratio of bad debt provisions to the size of the loan book. This has been very stable, which suggests that their credit scoring is performing well consistently. Creditstar collects €5 in interest for every €1 it loses from bad debts, which is an impressive result.
We also like that the business has been growing strongly, but not too quickly. This suggests that the business is being managed well, taking advantage of opportunities, but not taking too much risk by growing in an uncontrolled way. As at June 2019 the group had over €21m of equity, and a loan portfolio of almost €100m.
Finally, we like the quality of the financial information provided by Creditstar. Detailed lending metrics are made available, as well as audited financial statements, and quarterly financial reports. To view the latest Creditstar financial reports and information, visit Lendermarket and click on the ‘About’ section.
We think that Lendermarket is one of the best options for European P2P investors currently. The site is best for European P2P investors who are looking to diversify their investments across more than 1 platform.
We think the loan originator, Creditstar has a good track record and provides high quality reports and presentations. Even so, there is a limit to how much exposure an investor should have to any single loan originator. That’s why we think the best use for Lendermarket is to be included within a portfolio of different P2P sites, so that this risk can be properly diversified.
One of the best things about Lendermarket is its simplicity. It is very quick and easy to invest funds, and requires minimal maintenance / monitoring after this. Investors should use the auto-invest function. We suggest setting minimum returns to 11 or 12%, and selecting the loans from all countries except for Denmark. Denmark is a very strong country but there are planned regulatory changes that means that we would avoid investing there until the situation becomes clearer.
Once the auto-invest is done, there is very little that investors will ever need to do, other than to check that their portfolio is remaining fully invested.
Lendermarket has not published any statistics yet on customer numbers and funds raised, but we believe that they have had very strong early success. That’s good for Lendermarket investors because it means that the site is quickly becoming viable, and that Creditstar will consider Lendermarket to be an important strategic funding channel in the future.
For a limited time, Lendermarket is currently offering a 1% signup bonus for new investors. This will be credited on the invested balance during the first 60 days after signing up. We see these types of deals regularly for new sites, and they are then cut to 0.5% or disappear altogether. So if you are thinking of opening an account, do it before the 1% offer disappears. To qualify just use this link. Using this link will also help to support the research published on this site.
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Peerberry offers loans from multiple lenders. Rates are usually around 12%, and most loans have buyback guarantees. The site is easy to use and has a great design. Very similar to Lendermarket
Twino is another P2P site that has been established to fund the loans of a single lending group. That group was struggling financially for a while but seems to have now turned the corner. Site is very simple to use.
Viventor is a similar site to Mintos, just smaller. Some secured loans are available. There are multiple lenders listed on the site, but the quality can vary (see our Viventor lender ratings for details).
Lenndy is another multi-lender P2P investment site. It is much smaller than Mintos, but it has an interesting range of loans. Many have high rates, with buyback guarantees
VIAINVEST offers loans from 5 countries. All loans come with a buyback guarantee. Simple site that works well. Run by a profitable company with a decent track record